Wednesday, December 17, 2008

I am looking around for broadband services for my folks in Bangalore. They already have DSL via the state-owned BSNL. But this service is quite unreliable, being disconnected for days at a stretch. Before you draw conclusions about the India and her spotty infrastructure, be aware that this DSL broadband comes for about 5 Euros per month. That is 5 times lesser than comparable DSL in Germany. My way of looking at this is that part of the service offering (the reliability) is traded for the lower costs in India. Off course PPP (purchase power parity) will put 5 Euros in India right around 20 Euros in Berlin, but still, 5 Euros a month is a good deal - after all, people who buy broadband in India are very well off.

So we decided to shop around for cellular broadband services. The reasoning is that if you have a couple of services then at least one should be active at any time. The options are

1. Airtel (USB stick, 3G). Officially works at 115 kbps d/l, actually works at 15-20 kbps according to the salesperson, and costs 10 Euros a month for unlimited service.

I would go with option 2 for home use and option 1 for mobility. My folks have a better idea - just revert to dial-up when the DSL breaks because thats good enough for their need for checking email once a day. Cant argue with that!

Eric gave a great introduction to the theory and for once I started thinking of how great it would have been to take one of his classes! The idea of Mechanism Design is creating a set of rules that make selfish players behave in a way to achieve a certain outcome. In classical Game Theory the set of rules (constraints) are already given and then players try to maximize their utility (benefit) by playing by the rules via their self-chosen strategies. In the end, game theorists try to determine the steady state or Nash Equilibrium where no player can benefit by unilaterally changing his strategy.

Mechanism Design is about designing the constraints or set of rules. Eric spoke about things like writing the rules for green house emissions among the countries (the players). He also spoke about the energy sector and gave a simple example of how a mechanism can be designed to satisfy different players while making choices about which energy sources to develop.

Eric started with the brother-sister cake division example - how by letting the brother cut the cake in half and then letting the sister choose the first half the division would be fair. Mechanism Design - my brother and I(re)invented this one when we were 6 ;-) !